Adequacy of reasons - Section 213(4) Workers' Compensation and Injury Management Act 1981 (WA) - Relevant principles - Turns on own facts

Workers' Compensation and Injury Management Act 1981 (WA), s 213(4)

AK v Western Australia [2008] HCA 8; (2008) 232 CLR 438

Beale v Government Insurance Office of NSW (1997) 48 NSWLR 430

Manonai v Burns [2011] WASCA 165

Mount Lawley Pty Ltd v Western Australian Planning Commission [2004] WASCA 149; (2004) 29 WAR 273

Pollock v Wellington (1996) 15 WAR 1

Selvanayagam v University of the West Indies [1983] 1 WLR 585

SNF (Australia) Pty Ltd v Jones [2008] WASCA 121

Sotico Pty Ltd v Wilson [2007] WASCA 112

Summit Homes v Lucev (1996) 16 WAR 566

Wainohu v New South Wales [2011] HCA 24; (2011) 278 ALR 1

3 MURPHY JA: This is an appeal from a decision of Commissioner McCann in the Dispute Resolution Directorate. The matter involves the assessment of the respondent worker's degree of permanent disability for the purposes of div 2 pt 4 of the Workers' Compensation and Injury Management Act 1981 (WA) (the Act). The issue was the subject of arbitration before Arbitrator Melville in 2009. The appeal hearing before Commissioner McCann was confined to the question of whether the arbitrator's reasons concerning the respondent's degree of permanent psychiatric disability were adequate. The commissioner found that the arbitrator's reasons were inadequate.

4 In substance, the appellant in this appeal contends that the commissioner's reasoning does not support his conclusion that the arbitrator's reasons were inadequate.

5 The respondent filed a 'notice of contention' which did not seek to uphold the commissioner's decision, in the usual way, on grounds not relied on by the commissioner. Rather, it asserted that if the appeal were to be upheld, this court should embark on its own assessment of the respondent's permanent degree of psychiatric disability. The purpose for which the respondent sought to rely on the so-called 'notice of contention' was not clear. In the end, it was not pressed.

6 I accept the appellant's submissions and would allow the appeal, for the reasons which follow.

7 The respondent was injured on 3 June 2004 in the course of her employment as a chef when the handle of a large pot failed as she was lifting it from a stove top. She was then aged 52 years. The respondent instituted a workers' compensation claim and, in late June 2008, filed a Form 22 application seeking a determination that her degree of disability was 'not less than 30%'. In the Form 22 application, the injury was described as 'left thumb; left wrist; left shoulder; cervical spine; psychiatric'.

8 The application proceeded to arbitration before Arbitrator Melville and was heard over four days: 22 May; 24 June; and 1 - 2 October 2009.

On 24 June 2009, both parties agreed that the respondent's degree of permanent disability equated to at least 24.5%, made up of the following:

9 The issues that remained for the arbitrator to determine were:

(a) whether the respondent suffered a permanent loss of efficient use of her neck and, if so, the resultant percentage degree of disability; and

(b) whether the respondent suffered from a permanent psychiatric disability and, if so, the resultant percentage degree of disability.

10 In reasons published on 5 May 2010, the arbitrator concluded that:

(a) the respondent suffered a permanent loss of efficient use of her neck which equated to a degree of disability of 2%; and

(b) the respondent suffered no permanent psychiatric disability.

11 Accordingly, the arbitrator determined that the respondent's permanent degree of disability was 26.5% (comprising the agreed 24.5% plus 2% attributable to the neck injury).

12 On 31 May 2010, the respondent filed an application for leave to appeal the arbitrator's decision. The arbitrator's determination of the degree of disability attributable to the neck injury was not challenged, which meant that the appeal was confined to the arbitrator's findings concerning the alleged psychiatric disability.

13 The appeal was heard before Commissioner McCann on 27 August 2010. In reasons which were published on 29 October 2010, the commissioner concluded that the arbitrator's reasons concerning the alleged psychiatric disability were inadequate. He allowed the appeal, quashed the determination of the arbitrator (in part), and remitted the matter for rehearing before a different arbitrator, limited to the issue of the respondent's degree of permanent psychiatric disability (if any) and her overall degree of disability.

14 The appellant (the respondent's employer) now appeals the decision of the commissioner. Leave to appeal was granted on 12 January 2011.

15 After setting out the relevant background and identifying the issues for resolution, the arbitrator commenced his reasons with some general observations regarding the credibility of the respondent's testimony. He noted that the respondent's evidence in chief was 'remarkably brief' and consisted of the adoption of her written statement and verification that the tendered reports of Dr Williams and Dr Proud accurately recorded what she had told them (par 22).

16 The arbitrator then made the following findings concerning the evidence given by the respondent in cross-examination:

• the respondent's grasp of English was as good as that of many people for whom English is their first language (par 27);
• the respondent's answers to questions were often non-responsive (par 28);
• the respondent was focussed on proving her claim and was reluctant to co-operate in the process of giving evidence where her co-operation potentially may have been detrimental to her claim (par 37);
• the respondent was prone to exaggeration (par 38).

17 The arbitrator, over some 13 pages, set out and analysed numerous portions of transcript of the respondent's cross-examination in order to illustrate the bases for the above findings. He ultimately concluded that he had reservations about the accuracy of the respondent's evidence and was not willing to rely on it where it lacked cogent corroboration or conflicted with other evidence (par 50).

18 The arbitrator noted that the respondent's evidence-in-chief concerning the alleged psychiatric disability was 'scant' and amounted to the following portions of her witness statement (par 73):

12: 'As a result of my pain I suffered from ongoing psychiatric symptoms.'

13: 'As a result of my injury I have suffered from depressive symptoms, a reduction in my energy, my enjoyment of life, motivation and short term memory.'

14: 'I am sometimes suicidal.'

15: 'I have trouble sleeping and have feelings of worthlessness, helplessness and my confidence and self-esteem are low.'

16: 'I am constantly worried about the future.'

...

18: 'For the treatment of my psychiatric symptoms I take Amitriptyline to assist my sleep, however I reluctantly take these because of the side effects.'

19: 'I continue to suffer with symptoms as a result of my injury.'

19 Dr Williams is an orthopaedic surgeon. The arbitrator referred to Dr Williams' reports dated 30 October 2007 and 7 May 2008 and noted that neither seemed to contain anything relevant to the diagnosis and assessment of a psychiatric condition, although he noted that the 30 October 2007 report contained a statement that the respondent was 'suffering from episodes of emotional lability and anxiety' and that 'she was tearful and it was noted she had a disturbed relationship with her husband and was having psychiatric review'. Further, the arbitrator noted that in the 7 May 2008 report, Dr Williams said 'I have made no assessment of the psychological issues which appear to reflect a significant adjustment disorder with anxiety and depression combined with an element of post traumatic stress disorder. This should be assessed by a Clinical Psychologist or Psychiatrist'.

20 The arbitrator said that, taken at its highest, the statement in Dr Williams' second report might constitute a diagnosis of a psychiatric disability as at 7 May 2008. However, the arbitrator found Dr Williams' opinion to carry little weight given (par 78):

• it did not enable an assessment to be made of the degree of disability;
• it was not persuasive as the conclusions were not expressed in a way that enabled the reasoning to be scrutinised; and
• Dr Williams' lack of psychiatric expertise.

21 Dr Proud is a consultant psychiatrist. The arbitrator referred to Dr Proud's first report dated 1 November 2007, which was based on his clinical interview with the respondent that day, and recorded the following history given to Dr Proud by the respondent:

(a) The use of anti-depressant medication Amitriptyline, which appears to have been provided to help her sleep;

(j) She had trouble falling asleep and staying asleep;

22 The arbitrator also noted that Dr Proud's report states that 'clinical testing revealed normal short term memory and good concentration, although perhaps it was a little low for someone of her intelligence'.

23 The arbitrator records that Dr Proud concluded that the respondent had a final permanent psychiatric disability of 16% (par 81). However, that appears to be a typographical error, the correct figure in Dr Proud's report being 15% (GB 81).

24 The arbitrator stated that he was 'not willing to accept Dr Proud's opinion' for the following reasons (pars 82 - 83):

• the facts upon which Dr Proud's opinion was based appeared to be dependent upon the history provided by the respondent, whose evidence the arbitrator was reluctant to accept; and
• the descriptors given by the respondent to Dr Proud were 'short on detail', including:
  • a lack of explanation of the alleged poorness of the respondent's short term memory, which seemed to be at odds with the results of the clinical testing carried out by Dr Proud; and
  • a lack of explanation and particulars of the alleged 'suicidal' feelings.

25 The arbitrator referred to a further report of Dr Proud dated 22 February 2009, which he recorded as containing 'little material change' and expressing the same opinion as to the respondent's degree of disability as the November 2007 report. He noted that the 22 February 2009 report described an additional history of 'excessive cleaning habits' and 'mild impairments in concentration and short term memory', although the bases of those conclusions were not indicated.

26 The arbitrator stated that, given his reservations as to the respondent's credibility, he would not give 'significant weight' to Dr Proud's opinion (par 86). I would interpret that to be a finding, in substance, that he did not accept Dr Proud's opinion evidence, given his prior statement to that effect (see [24] above) and his observation that the later report contained 'little material change'. It is also to be inferred that the arbitrator rejected the respondent's history as set out in Dr Proud's reports (see [21] above).

Dr Terace's reports - findings (pars 87 - 95)

27 Dr Terace is a consultant psychiatrist. The arbitrator referred to Dr Terace's report dated 2 October 2008 which was prepared following his examination of the respondent on 10 September 2008. The arbitrator observed that the 'dismal picture of the [respondent's] activities described by Dr Proud can be contrasted with what appears to be a reasonably wide range of activities described under the heading "current level of activity" in Dr Terace's report' (par 87).

28 The 'current level of activity' section of Dr Terace's report to which the arbitrator referred listed in detail the respondent's activities, and included the following observation (GB 129):

(Comment:

Ms Tudor's level of activity is very extensive and is not consistent with a psychiatric disability or a substantial psychiatric condition or disorder. Any limitations to her level of activity must be related to the physical aspect of her condition, because they are certainly not psychiatric or psychological. She did not describe a primary cognitive impairment, or true pervasive anhedonia: the inability to enjoy normally pleasurable activities. She was able to talk extensively about her enjoyment of the arts, literature, her desire to visit Florence and her love of Italy in the context of being very animated behaviourally, associated with recurrent smiles. These are not the symptoms or signs of a psychiatric condition or disability.) (emphasis in original)

29 The arbitrator found that the respondent did engage in the activities recorded in Dr Terace's report, despite the different history given by the respondent to Dr Proud. He so found on the basis that the respondent knew she was being seen by Dr Terace for the benefit of the appellant employer (or its insurer), making it unlikely that she would have overstated her level of activity in those circumstances (pars 88 - 89).

(a) noted that Dr Terace 'could not support [Dr Proud's] diagnosis of adjustment disorder/disbursement [sic - disturbance] in the present' (par 95);

(b) noted that Dr Terace considered that the respondent did not require psychiatric treatment (par 95);

(c) accepted the opinion of Dr Terace in preference to that of Dr Proud, on the basis that Dr Terace had a more accurate history (par 93); and

(d) on the above basis, concluded that he was not satisfied that the respondent has any permanent psychiatric impairment (par 95).

31 The arbitrator also made the following findings relevant to the alleged psychiatric disability:

• the respondent's evidence concerning incidents she described as 'suicide attempts' was not corroborated by medical records and should be rejected (pars 39 - 48);
• the respondent's statement to Dr Terace, recorded in his report of 2 October 2008, to the effect that she prepares a list of her needs and her neighbour undertakes shopping tasks for her, should not be accepted in its entirety, as video surveillance evidence indicates that the respondent has the capacity to undertake shopping activities. Accordingly, the respondent's level of activity should be taken to be greater than that recorded by Dr Terace (pars 89 - 90);
• whilst the respondent was prescribed 'Endep' (Amitriptyline), that was for the purpose of assisting her to sleep and not for the purpose of treating a psychiatric disorder (par 91); and
• whilst the respondent was referred to, and treated by, a psychologist (Dr German-Belmont), that treatment was completed, and there was nothing in the psychologist's report to indicate that the diagnosis of 'adjustment disorder with anxiety' and 'pain disorder associated with both psychological factors and a general medical condition' was permanent or existed at the time the respondent was reviewed by Dr Terace (pars 76, 94).

32 The commissioner approached the appeal on the basis that the respondent's four grounds of appeal amounted, in substance, to the following two contentions which the commissioner dealt with together (par 26):

1. that the arbitrator erred in law by failing to consider relevant evidence and make proper findings; and
2. that the arbitrator failed to give adequate reasons for his decision.

33 Neither party challenges the approach taken by the commissioner.

The arbitrator's findings concerning the respondent's credibility (pars 32 - 36)

34 The commissioner found no error in the arbitrator's assessment of the respondent's credibility. The commissioner was satisfied that the arbitrator did not attach excessive weight to the respondent's demeanour, and that his reasoning concerning the implications of her unresponsiveness and uncooperative attitude during cross-examination was legitimate. The commissioner said (par 36):

I am not satisfied that there was any deficiency in the arbitrator's approach to [the respondent's] credibility, or his reasons in that regard.

**Findings concerning the arbitrator'**s reasons generally

35 The commissioner made the following relevant findings about the arbitrator's consideration of the evidence and process of fact finding generally, before moving on to consider more specific findings.

36 First, the commissioner found, contrary to the respondent's submission, that the arbitrator did not simply reject the respondent's claim in accordance with the rule in Pollock v Wellington (1996) 15 WAR 1 and thereby fail to address the case and the evidence. As best I understand it, the respondent's submission to the commissioner was to the effect that, having first found the respondent's evidence to be unreliable, the arbitrator treated all of the remaining evidence in support of her claim, including Dr Proud's report, as inadmissible and did not have regard to it, on the basis that the evidence was dependent upon the respondent's version of facts. The commissioner found that the arbitrator did not treat the evidence in support of the respondent's claim as inadmissible and exclude it entirely, and rather made his own assessments of weight (par 37).

37 Secondly, the commissioner found that the arbitrator's use of words such as 'appears' and 'note' were sufficient to signify that the arbitrator was making findings, on the balance of probabilities, about subsidiary or circumstantial facts. So, for example, 'noting' that Dr Terace did not support a particular diagnosis was sufficient to indicate that the arbitrator had taken the relevant evidence into account or was persuaded by it (pars 39 - 41).

38 Thirdly, the commissioner expressed some disapproval (par 42) of the way in which the arbitrator had made findings of fact, particularly in relation to the respondent's level of activities, by reference back to the activities outlined in the history given by the respondent to Dr Terace and set out in Dr Terace's report . Nevertheless, the commissioner found that all the arbitrator's findings of fact 'were adequate' (par 56). That conclusion, which is not challenged, would appear, with respect, to be correct. In a case where the evidence-in-chief on the issue of psychiatric disability was minimal, and where there were only two competing psychiatric opinions, it may be accepted that the express acceptance in the arbitrator's reasons of the history given to one psychiatrist adequately disclosed the facts found by the arbitrator in that regard.

39 The commissioner also found that the arbitrator gave adequate reasons for not being persuaded by Dr Proud's evidence and for preferring the evidence of Dr Terace (par 43). His criticism was that 'the arbitrator did not explicitly refer to' any identifiable part of Dr Terace's reasoning (par 43).

The issues identified by the commissioner for resolution

40 Following the above observations about the arbitrator's reasons generally, the commissioner said (par 44):

Against that background, I propose to consider the following issues. First, is sufficient known of the arbitrator's express findings of fact, and his reasoning as to those findings, to enable one to identify (and comprehend the reasons for) any necessarily implicit findings? Second, did the arbitrator fail to consider or identify findings about relevant factual issues? Third, did he adequately explain why his findings of fact led to his ultimate conclusion? Fourth, if any of these questions is answered in the negative, can the arbitrator's decision still be upheld?

41 Although the commissioner did not go on to make express findings in relation to the four issues which he had formulated for resolution, it would appear, from a consideration of his reasons as a whole, that he considered that the answer to the first question was, 'Yes - that all the findings express and necessarily implicit, were identified'; that the answer to the second question was, 'No - that the arbitrator did not fail to consider or identify findings about relevant factual issues'; that the answer to the third was, 'No - he did not adequately explain how the findings that he made led to the ultimate conclusion'; and that the answer to the fourth issue was, 'No - the arbitrator's decision could not be upheld in light of the negative answer to the third issue'.

42 It is the third issue with which this appeal is primarily concerned.

43 The commissioner then went on to make the following findings concerning what he described as 'the arbitrator's findings about the subsidiary, circumstantial matters relied on by [the respondent]' (par 45):

• the arbitrator found, and it was open to him to find, that Endep (Amitriptyline) was only prescribed for the respondent's sleep and not to treat a psychiatric disorder (par 46, 57);
• the arbitrator had regard to Dr German-Belmont's reports and the respondent's GP's clinical notes (par 47);
• the arbitrator's finding that the respondent's psychological treatment with Dr German-Belmont 'appears to have been completed and there is nothing in the report to indicate that the diagnosis ... was permanent or existed at the time the [respondent] was reviewed by Dr Terace', was open on the evidence (pars 47 - 48);
• the arbitrator took the respondent's physical symptoms into account when considering her psychiatric condition (par 50);
• the arbitrator referred to Dr Williams' reports and found that his views concerning the respondent's psychiatric condition warranted little weight for various reasons, including his lack of specialisation in psychiatric matters (par 52);
• the arbitrator did not refer to Dr Gillett's observations, nor did he need to (par 52);
• the arbitrator took into account Dr Terace's observation that the respondent 'might have suffered from a mild psychiatric disorder in the past' (par 53).

44 The commissioner then proceeded to address what he called the 'factual findings which were actually made by the arbitrator' (emphasis added). It is unclear what the commissioner intended those words to mean, other than perhaps to indicate that the commissioner regarded these findings as findings of a more primary and direct nature than the 'subsidiary circumstantial' matters the subject of the previous findings (cf par 45).

45 The commissioner found that the arbitrator made the following findings:

• that the interests and daily activities of the respondent recorded in Dr Terace's report of 2 October 2008 were accurate, namely (pars 13, 56):
  • sketching in her home for approximately one or two hours per day;
  • extensive reading, which was frequently interrupted by neck stiffness and pain;
  • interest in birds and orchids of which she had collections;
  • feeding her pets throughout the day which she found quite 'soothing';
  • walking along the beach almost every morning;
  • doing her own cooking and cleaning; and
  • growing vegetables in her garden;
• that the respondent is capable of doing her own shopping and does so from time to time (par 56);
• that the respondent may have suffered from a psychiatric disease in the past (par 56);
• that the respondent received psychological treatment from Dr German-Belmont (par 56);
• that the respondent did not suffer the following symptoms recorded in Dr Proud's report of 1 November 2007 (par 57) (cf subpars (b) - (f) and (k) - (l) of [21] above):
  • not had sex for two years;
  • low libido;
  • lack of energy;
  • poor enjoyment of life;
  • poor motivation;
  • feelings of worthlessness and helplessness; and
  • low confidence and self esteem;
• that the respondent's short-term memory was not poor and her concentration was good (par 57) (cf subpars (g) and (h) in [21] above);
• that the respondent did not have suicidal ideations (par 57) (cf subpar (i) in [21] above);
• that the respondent had trouble falling asleep and staying asleep (par 57); and
• that the respondent did not have excessive cleaning habits (par 58).

46 Whilst the commissioner expressed a concern at what he regarded as the 'elliptic nature of the arbitrator's reasons' (see par 59, read with pars 42 and 56), the commissioner, nevertheless, concluded (par 59):

I am satisfied that all of the above-mentioned findings or non-findings were adequately identified, and adequately explained in the sense that the reasons which I have attributed to the arbitrator accord with the general approach to the facts which he enunciated.

47 Then, the commissioner referred to Dr Proud's second report of 22 February 2009. In that report, Dr Proud had said, relevantly (GB 98):

Functionally, there has been no change since my description in the first report.

Mental state examination was essentially unchanged ... She was loquacious and dramatic, indicating her personality. She was also dysthymic and somewhat labile this time, crying at times.

It seems to me that the arbitrator may have treated these symptoms (which overlap somewhat) in the same way as other conclusionary remarks in Dr Proud's first report, that is to say, he regarded them as lacking in detail and explanation and attached very little weight to them. This implication is consistent with the arbitrator's observation that the second report disclosed 'little material change' to the first. Having said that, I point out that Dr Proud furnished a salient particular of [the symptoms], namely that Ms Tudor was 'crying at times' when he saw her on 10 February 2009. The arbitrator made no reference to, or finding about, that evidence.

49 I would interpolate that, in my view, the commissioner was correct to infer that the arbitrator attached no significant weight to Dr Proud's observation that the respondent was 'dysthymic and somewhat labile' at the time of that particular examination, in light of the preceding and related overall finding on examination that her condition 'was essentially unchanged'. Dr Proud had not reported, on the earlier occasion, that the respondent had presented as dysthymic or labile, and Dr Terace had also not recorded any presentation to that effect. In the context of this case, Dr Proud's observations on the second occasion were not required to be specifically canvassed by the arbitrator (see the discussion in [57] - [70] and [85] below).

50 Finally, before stating his conclusion that the arbitrator had failed to explain why his findings of fact led to the ultimate conclusion that the respondent did not suffer from a permanent psychiatric disability, the commissioner referred to the parties' submissions concerning the nature and effect of Dr Terace's evidence. The commissioner set out in detail large portions of Dr Terace's report (pars 63 - 66), which explained why Dr Terace had found there to be no permanent psychiatric condition.

51 In the course of setting out Dr Terace's reasons, the commissioner pointed to what he perceived to have been a potential inconsistency in Dr Terace's reasoning. The commissioner said in this regard (par 66):

In arriving at that conclusion [Dr Terace] had regard to the criteria set out in the SSRI and concluded that a rating of nil was justified, meaning:

'Minimal symptoms may be present but no more than slight impairment and function, varying degree of everyday worries and problems that sometimes get out of hand.'

I would comment that this statement seems to allow of the possibility that Ms Tudor did have minimal symptoms of a psychiatric condition, which undermines Dr Terace's asseverations elsewhere as to the absence of any indicia of that kind.

52 As to this comment, it appears that the commissioner may have been in error, with respect, in relation to his understanding of this aspect of Dr Terace's report. Dr Terace's report explained in detail why he was of the view that the respondent did not have any recognisable psychiatric condition. Having concluded that part of his report, and in response to a number of specific questions in relation to Dr Proud's opinion, Dr Terace said, in effect, that even if the respondent had 'psychological experiences' of the kind referred to by Dr Proud, she would 'best be rated at zero, or nil percent' under the SSRI criteria. Dr Terace did not refer to the zero rating as part of his reasons for concluding that the respondent did not have a recognisable psychiatric condition. Rather, in response to Dr Proud's report, Dr Terace indicated that, even assuming (contrary to Dr Terace's opinion) the respondent's psychological experiences could be characterised as a recognisable psychiatric condition, her degree of impairment was nevertheless nil. Further, it is not clear why the commissioner construed Dr Terace's report as containing 'asseverations' (solemn declarations) that there was an absence of indicia of psychological/psychiatric symptoms. Dr Terace noted and made express reference to the respondent's psychological experiences, but said that they were 'within the bounds of normal psychological functioning' (as is apparent from one of the extracts quoted by the commissioner at par 66 of his reasons).

53 In any event, the inconsistency perceived by the commissioner does not appear to have affected the commissioner's conclusions in relation to the reliability of Dr Terace's evidence. The commissioner does not find that after considering all of the evidence, the arbitrator could not have accepted Dr Terace's expert opinion. (Dr Terace, like Dr Proud, was not cross-examined.)

54 On the contrary, the commissioner concluded (par 67):

So, I accept [the appellant's] submission. Dr Terace's reasoning is persuasive in the light of the facts as found by the arbitrator. In simple terms, Ms Tudor's daily activities, mental state and other matters were contra-indicators to a psychiatric diagnosis and there was a lack of other potential symptoms (indicators) such as anhedonia. I also accept that the arbitrator was impressed by Dr Terace's evidence, and took it into account. (emphasis added)

55 His Honour then made the criticism of the arbitrator which is central to this appeal. He found that (par 67):

However, these matters are not sufficient to save the decision. In my opinion the arbitrator's complete failure to actually expose Dr Terace's reasoning, let alone his own, entails that the reasons are inadequate. (emphasis added)

I turn now to consider whether the shortcomings in the arbitrator's reasons have led to a miscarriage of justice. As I have said, the acceptance of Dr Terace's opinion as to the diagnosis and his explanatory evidence could certainly justify the arbitrator's decision. However, in my opinion all of those aspects needed to be exposed in the arbitrator's reasons which, in my opinion, did not 'yield a reasoned decision' in relation to the first ultimate issue in the psychiatric claim. ...

I am satisfied that the arbitrator considered all of the relevant evidence and, for the most part, made findings of fact upon it, and adequately explained those findings. However, there is nothing in his reasons which explains why those findings led to his ultimate findings. In my opinion the second, but not the first, of Ms Tudor's contentions on appeal has been made out ... (emphasis added)

Adequacy of arbitrators' reasons - principles

57 Both parties in this appeal, and the commissioner below, accepted that s 213(4) of the Act applied to the arbitrator's reasons. Section 213(4) provides:

(a) need only identify the facts that the arbitrator has accepted in coming to the decision and give the reasons for doing so; and

(b) need only identify the law that the arbitrator has applied in coming to the decision and give the reasons for doing so; and

(c) need not canvass all the evidence given in the case; and

(d) need not canvass all the factual and legal arguments or issues arising in the case.

58 The parties to this appeal also proceeded on the basis that the common law principles were to be applied in light of and subject to s 213(4).

59 Before mentioning recent appellate authority on s 213(4), it is appropriate to refer briefly to the position under the common law. Under the common law, the duty of judges to give reasons for their decisions is well-established and has recently been described by the High Court as an 'aspect of the judicial function': Wainohu v New South Wales [2011] HCA 24; (2011) 278 ALR 1 [55] - [56] (French CJ & Kiefel J). See also AK v Western Australia [2008] HCA 8; (2008) 232 CLR 438 [89] (Heydon J).

60 The function of reasons is to give effect to any right of appeal, to enable an appeal court to determine whether or not an appellable error was made, and to allow the parties to understand why they were or were not successful: Mount Lawley Pty Ltd v Western Australian Planning Commission [2004] WASCA 149; (2004) 29 WAR 273 [27]; SNF (Australia) Pty Ltd v Jones [2008] WASCA 121 [32].

61 In Beale v Government Insurance Office of NSW (1997) 48 NSWLR 430, 443 - 444, Meagher JA said:

No mechanical formula can be given in determining what reasons are required. However, there are three fundamental elements of a statement of reasons, which it is useful to consider. First, a judge should refer to relevant evidence. There is no need to refer to the relevant evidence in detail, especially in circumstances where it is clear that the evidence has been considered. ...Where conflicting evidence of a significant nature is given, the existence of both sets of evidence should be referred to.

Secondly, a judge should set out any material findings of fact and any conclusions or ultimate findings of fact reached. ... Where one set of evidence is accepted over a conflicting set of significant evidence, the trial judge should set out his findings as to how he comes to accept the one over the other. But that is not to say that a judge must make explicit findings on each disputed piece of evidence, especially if the inference as to what is found is appropriately clear ... Further, it may not be necessary to make findings on every argument or destroy every submission, particularly where the arguments advanced are numerous and of varying significance

...

Thirdly, a judge should provide reasons for making the relevant findings of fact (and conclusions) and reasons in applying the law to the facts found. Those reasons or the process of reasoning should be understandable and preferably logical as well.

62 In AK v Western Australia [85], Heydon J observed (with respect to s 120 of the Criminal Procedure Act 2004 (WA), although as I would apprehend it, the common law obligation would not be any narrower in scope) that ordinarily, a trial judge will need to summarise the crucial arguments of the parties, formulate the issues, resolve issues of law and fact and in so doing explain how the judge dealt with the parties' contentions in the resolution of those matters, apply the law to the facts as found, and explain how the final result followed.

63 Whether the content of reasons is adequate will depend on the circumstances of the case, including the nature of the jurisdiction being exercised: Wainohu [56]. The court will look at the reasons as a whole and, if necessary in the context of the evidence, to determine whether they give a sense of what was intended in a way that achieves their required function and purpose: SNF v Jones [32].

64 As Meagher JA observed in Beale v Government Insurance Office of NSW, where there is conflicting evidence on a matter of significance, the judge should set out his or her findings as to why one set of evidence is preferred to another, however, it is unnecessary to make explicit findings on each disputed piece of evidence, especially if the inference as to what is found is appropriately clear. In support of that proposition, Meagher JA cited the case of Selvanayagam v University of the West Indies [1983] 1 WLR 585. The following passage appears in the judgment of Lord Scarman (587 - 588):

It is understandable that the Court of Appeal may have felt disposed to criticise the judgment at first instance as unstructured and prolix. But it is abundantly clear that the judge had the evidence - all of it - very much in mind. It is, of course, not necessary for a trial judge to make explicit findings on every disputed piece of evidence. If it is clear that he has the evidence in mind, it suffices for him to state his final conclusion ...

65 In Summit Homes v Lucev (1996) 16 WAR 566, Ipp J (Kennedy & Rowland JJ agreeing) said the following in relation to arbitrators (or 'review officers' as they were called under the Act at the relevant time) (569):

The judicial functions and powers of review officers, and the limitations imposed on appeals from their decisions, and the ouster of prerogative relief provided by s 84ZN, make it particularly important for them to give properly reasoned decisions, when required, in which full and detailed factual findings are set out. If this is not done, the parties' rights of appeal, limited as they are, may be subverted. In Lloyd v Faraone [1989] WAR 154 (at 163) Malcolm CJ (with whom Brinsden J agreed) emphasised the duty of the trial judge to reveal his or her reasons 'to such an extent as will enable an appellate court to consider and determine whether or not the judgment is erroneous.' The learned Chief Justice (at 164) observed that an error in law would arise from 'the failure to give relevant reasons in circumstances which result in a party being deprived of an effective right of appeal conferred by statute.' These observations apply a fortiori to review officers. (emphasis added)

66 The court in Summit Homes v Lucev held that arbitrators fulfil judicial functions and are bound to act judicially, which includes a duty to provide reasons which are adequate according to the established common law principles. It is important to note, however, that at the time of the decision in Summit Homes v Lucev, the Act, as it was at that point in time, did not contain an equivalent section to the current s 213(4).

67 In Heatley v Jovista Pty Ltd [2006] WACC C12-2006, Commissioner Nisbet commented on the effect of the Summit Homes v Lucev decision on arbitrators' reasons. He said [9]:

Ipp J's criticism of ... the inadequacy of review officers' decisions, led to an increase in the length of arbitrators' decisions, some going over 100 pages as review officers sought to demonstrate by regurgitating the evidence before them, that they had firstly considered the evidence, secondly given it appropriate weight, and thirdly had exposed every single step in their reasoning process.

68 In relation to s 213(4) of the Act, in Sotico Pty Ltd v Wilson [2007] WASCA 112 Wheeler JA (Steytler P agreeing) observed [23] - [24]:

It is important, in my view, to have regard to s 213 against the factual context in which it was enacted. Arbitrators are frequently called upon to give reasons in cases where there will be a very significant number of medical reports, many of which will conflict with each other in terms of the history taken, the diagnosis reached and the prognosis which is given. Injured workers may suffer from a number of different conditions at the same time, and different medical practitioners may assess each different condition in different percentage terms, giving rise to a very large number of potential outcomes. It is against that background that the Arbitrator is required only to identify the facts accepted and to give the reasons for doing so.

By implication, it seems to me, the legislature was intending that the Arbitrator should not be required to engage in an exhaustive process of specifying which opinions were rejected, and the reasons for their rejection. Of course, where some of the opinions rejected attack the reasoning process of the opinion which is accepted, or are based, for example, on a clinical examination which has a result very different from that outlined in the reports to be accepted, it will no doubt be necessary for the Arbitrator, in explaining why he accepts the facts which he does, to explain his preference for that reasoning or for accepting that history as correct, and thereby, indirectly, to engage with the reasoning or fact finding process of those opinions which are to be rejected.

69 More recently, this court in Manonai v Burns [2011] WASCA 165 considered s 31 Magistrates Court Act 2004 (WA) which is identical in terms to s 213(4). Hall J (with whom Pullin & Murphy JJA agreed) said [56]:

The realities of pressure of work and limited time in the magistrate's court must be acknowledged. Section 31 of the Magistrates Court Act obviates any need for a magistrate to canvass all of the evidence given in the case or to canvass all the factual and legal arguments or issues arising in the case. These dispensations appear to recognise the summary nature of proceedings in the Magistrates Court. Reasons can be adequate and comply with s 31 of the Magistrates Court Act without having to be unduly long. It is the substantive content of the reasons rather than their length which is important.

70 In identifying the facts accepted and the reasons for doing so (s 213(4)(a)) and the law applied and the reasons for doing so (s 213(4)(b)), the arbitrator will in my view still be obliged to expose the reasoning process linking them, and justifying the ultimate result (cf AK v Western Australia [44]).

71 The appellant relies on three grounds of appeal. They are:

1. The Commissioner erred in law in finding that the Arbitrator completely failed to expose Dr Terace's reasoning and his own reasoning and that as a result the reasons were inadequate.
2. The Commissioner erred in law by erroneously applying the principles in AK v The State of Western Australia.
3. The Commissioner erred in law in ordering a re-hearing and partly quashing the Arbitrator's order when there was no miscarriage of justice identified.

72 Grounds 1 and 2 were dealt with together at the hearing. Accordingly, I will deal with them together in the reasons which follow. Grounds 1 and 2 address, in substance, what the commissioner described as the 'third' issue (see [40] above). Ground 3 addressed, in substance, the 'fourth' issue. Counsel for the appellant accepted that it would only be necessary to consider ground 3 in the event that grounds 1 and 2 were unsuccessful.

73 Counsel for both parties agreed that these two grounds are, in substance, directed to the question of whether the arbitrator adequately explained his reasons for concluding that the respondent does not have a permanent psychiatric disability.

74 The appellant submitted, in effect, that the operative finding that led the commissioner to conclude that the arbitrator's reasons were inadequate was that the arbitrator failed to explain why his findings of fact led to his ultimate conclusion.

75 The commissioner's reasons for so finding may be summarised as follows:

• the arbitrator did not incorporate into his reasons the contents of Dr Terace's evidence;
• although it is clear that the arbitrator took Dr Terace's reasoning into account, it is unclear whether the arbitrator adopted Dr Terace's 'diagnostic reasons'; and
• Dr Terace's opinion, diagnosis and reasoning were not 'exposed' in the arbitrator's reasons.

76 These alleged inadequacies in the arbitrator's reasons are to be considered in the context that the commissioner accepted counsel for the appellant's submission that Dr Terace's reasoning was persuasive in light of the facts as found by the arbitrator (par 67), and the commissioner's finding that 'acceptance of Dr Terace's opinion as to the diagnosis and his explanatory evidence could certainly justify the arbitrator's decision' (par 68).

77 The appellant submits, in effect, that the arbitrator's reasons satisfy the basal requirements of reasons, given that the matter, in substance, came down to an assessment of the respondent's credibility and a contest between Dr Proud's opinion evidence on the one hand, and Dr Terace's opinion evidence on the other. According to the appellant, reading the reasons in that context, the respondent could be in no doubt as to why she lost; namely, the arbitrator was not prepared to accept her evidence as credible, and the arbitrator preferred Dr Terace's opinion evidence to that of Dr Proud. In those circumstances, it was enough for the purposes of s 213(4) the Act to identify Dr Terace's opinion evidence, and to give the basic reasons for accepting it. It was not necessary for the arbitrator to go further and canvass the detail of Dr Terace's opinion evidence in the reasons.

78 On the other hand, the respondent submits that it is not apparent from the arbitrator's reasons why the arbitrator preferred Dr Terace's opinion evidence to that of Dr Proud. Counsel for the respondent said (ts 22, 27):

[W]hat the arbitrator did not do in this case ... is undertake the requisite level of forensic analysis required to enable a reasonable person understanding the reasons why Dr Terace's report was preferred.

...

[W]hen there are competing contentions as to a particular finding that ought to be made, it is incumbent upon a decision-maker to undertake a much more thorough analysis of the evidence and the findings than what was undertaken in this case which effectively boils down to a conclusion based on a number of paragraphs.

79 Counsel for the respondent also pointed to par 42 of the commissioner's reasons, where the commissioner disapproved of the arbitrator making findings by cross-reference to matters in Dr Terace's report. Counsel for the respondent also submitted, in effect, that the arbitrator's reasons were not lengthy enough in relation to the issue of psychiatric disability.

80 As to the last two mentioned matters, I have already noted that the commissioner, despite his disapproval of the technique of cross-referencing, concluded that the findings of fact were sufficiently clear (see [46] above). Also, as Hall J observed in Manonai v Burns [56] it is 'the substantive content of the reasons rather than their length which is important'.

81 In relation to the more general complaint that the reasons did not enable a reasonable person to understand why Dr Terace's report was preferred, counsel for the respondent, when asked what the arbitrator should have done, said that the arbitrator should have adopted an approach similar to that of the commissioner. Consideration of the commissioner's reasons suggests that this amounts to, in effect, a submission that, in order for the reasons to be adequate, the arbitrator was required to set out, in his reasons, the content of Dr Terace's report, and state, in terms, that he adopted Dr Terace's 'diagnostic reasons'.

82 I accept the appellant's submissions. In my view, it was not necessary for the arbitrator to set out the contents of Dr Terace's report and say, in terms, that he accepted Dr Terace's diagnostic reasons.

83 I have recorded, in [27] - [30] above, the arbitrator's findings in relation to Dr Terace's report.

84 In considering whether, in the context of this case, it was necessary for the arbitrator to make any further detailed reference to Dr Terace's evidence, the following circumstances are relevant:

• the commissioner's finding, which is not challenged, that in relation to the psychiatric issue the arbitrator considered all of the relevant evidence, made relevant findings of fact and adequately explained his findings (par 69) including in relation to the respondent's credibility (par 36);
• there were only two psychiatric experts, each of whom had prepared written reports following an examination of the respondent, such that the respondent and her advisers must be taken to have been familiar with the contents of those reports;
• the dispute, in relation to the psychiatric issue, was, in substance, which psychiatric opinion should be preferred; and
• the commissioner's finding that the arbitrator gave adequate reasons for preferring Dr Terace's opinion to that of Dr Proud (par 43).

85 In those circumstances, it is not apparent to me what detailed reference to the contents of Dr Terace's report could have added to the arbitrator's reasons, other than length. Given the arbitrator's unfavourable findings concerning the respondent's credibility, and the other circumstantial matters which the respondent relied upon in support of her case (see [15] - [17] and [31] above), the dispute before the arbitrator boiled down to a contest between the opinion evidence of Dr Proud on the one hand, and Dr Terace on the other. That being so, it was incumbent on the arbitrator to explain why he accepted Dr Terace's opinion over Dr Proud's, but it was not necessary for the arbitrator to make explicit findings concerning each conflicting aspect of the respective reports. If it is clear that the arbitrator had Dr Terace's evidence in mind, it was sufficient for him to state his final conclusion (see Beale and Selvanayagam above).

86 In my view, it is evident from the arbitrator's reasons that the arbitrator had the substance of Dr Terace's evidence in mind. Moreover, his final conclusion was stated in the clearest of terms. He said (par 95):

Given my preference for the report of the opinion of Dr Terace I am not satisfied the applicant has any permanent psychiatric impairment. (emphasis added)

87 As I have mentioned, in the course of submissions, counsel for the respondent said that the arbitrator's reasons do not adequately explain why the arbitrator preferred Dr Terace's evidence to Dr Proud's. That submission cannot be sustained in light of the commissioner's finding that the arbitrator's reasons were adequate in that regard. That finding was not challenged by notice of contention. In any event, that conclusion by the commissioner has not been shown to be wrong.

88 It follows, in my view, that the arbitrator's reasons do not reveal any infringement of the requirements of s 213(4). They also adequately disclose to the respondent why she was unsuccessful and are sufficient to reveal the existence of any appellable error. There were, broadly speaking, two main factors which compelled the arbitrator to his ultimate conclusion:

1. his finding that the respondent's evidence was not credible; and
2. his acceptance of Dr Terace's opinion in favour of Dr Proud's.

89 The arbitrator's reasons in relation to both aspects were adequate to disclose to the respondent why he formed the ultimate view that he did. Contrary to the view expressed by the commissioner, the arbitrator's ultimate conclusion, that the respondent does not suffer from a permanent psychiatric disability, followed as a logical consequence of the arbitrator's reasoning and did not require further explanation.

90 Nor does the commissioner's reliance on the case of AK v Western Australia support his conclusion that the arbitrator failed to expose his reasoning. A central issue in AK v Western Australia was the identity of the male perpetrator who had indecently dealt with the female complainant. The complainant gave evidence that she had woken in the dark, being touched by a male person whom she was certain was the accused although she could not explain how she knew as she had not looked at the person and could not have seen him in the dark. Notwithstanding that the identity of the perpetrator was in issue, the trial judge concluded that he was satisfied that the accused was the perpetrator, but did not set out the findings of fact upon which he relied in reaching that conclusion.

91 In contrast, in this case the arbitrator made unfavourable findings concerning the respondent's credibility and the other circumstantial evidence she relied on, for which, the commissioner found, adequate reasons were given. Further, again for reasons which were found by the commissioner to be adequate, the arbitrator accepted the factual bases underpinning Dr Terace's opinion, adopted Dr Terace's expert opinion evidence, which was based on his examination and clinical assessment of the respondent, and concluded that she does not suffer from a recognisable psychiatric condition. That being so, the arbitrator's 'process of reasoning' is readily ascertainable: cf AK v Western Australia [46] (Gummow & Hayne JJ).

92 For the above reasons, I am of the view that the commissioner erred in finding that the arbitrator's reasons were inadequate, with the result that grounds 1 and 2 have been made out.

93 In light of the conclusion I have reached regarding grounds 1 and 2, it is unnecessary to deal with ground 3.

94 The appeal should be allowed, the decision of the commissioner set aside, and the decision of the arbitrator reinstated.